I am using this tool on elevation and imagery data. It processes fine but when viewing the mosaic raster dataset first time its all looks good but then I get a chessboard look rather than the overview as it should i.e elevation.
I also have this issue. I created the mosaic dataset in ArcMap Desktop (Advanced), chose the Update Overviews option when I loaded the Rasters. I am trying to put a copy the mosaic dataset on an ArcMap (Basic) machine that will be used for Emergency Management and probably won't have an internet connection when used. I am getting the checkerboard pattern. Is it just because it is a Basic license?
Nice blog post, that was the one that I provided in the hyperlink of the word blog above.
If the overviews are the checkerboard, then you have to confirm on the attribute table of the footprint that they were actually generated. If they were generated, then try to use the path specified by them where you are trying to access the mosaic dataset. You should not be able to hit that folder if it is a permission issue, so you will have to allow the user to access those overviews via folder sharing/security. If they have not been generated, then use the Build Overviews tool. Remember that the checkerboard is the default behavior when either the source raster or overview cannot be seen, but has been created.